Ahead Of The Bell: Armstrong World Upgraded

NEW YORK (AP) — An analyst upgraded Armstrong World Industries Inc. Friday, saying its shares are cheap, its debt is shrinking and its dominant market share positions it for a big post-recession rebound.

SunTrust Robinson Humphrey analyst Keith Hughes raised his rating on the maker of flooring and ceiling products to "Buy" from "Neutral." He noted the shares are trading near liquidation value and some 25 percent below its peers.

Furthermore, the Lancaster, Pa.-based company's net debt is falling rapidly. It declined to $85 million by the end of June from $276 million a year ago.

Additionally, Armstrong holds the dominant U.S. market share in residential hardwood flooring, resilient flooring and commercial ceiling products, said Hughes.

The analyst noted that TPG, a private equity group formerly known as Texas Pacific Group, agreed this month to take at least a 14 percent stake in Armstrong, dramatically raising the stock's visibility.

In addition, TPG may "accelerate strategic decisions such as restructuring of the money-losing European flooring units, capital investments in hardwood flooring production, a recapitalization of the balance sheet in the future with significant cash for dividend/share repurchase and potential strategic maneuvers in the U.S. vinyl flooring unit," Hughes said.